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Professional Investor Presentation – Setting the foundations forchange in the precious metals industry.
Redefining the way the world trades physical
ABX An AlternativeGlobal Marketplace Allocated Bullion Exchange (ABX) is the world’s first
electronic institutional exchange for allocated physical precious metals.
We bring global trading, price discovery and clearing facilities into one online trading environment via our ground-breaking trading platform, MetalDesk.
We are Modernising and Globalising the precious metals markets by redefining the way physical bullion is traded.
We connect all major global liquidity centres and break down barriers of entry to the global wholesale market.
Our Exchange delivers the ability to trade physical gold, silver and platinum wherever you are using our online platform in the same way that you would trade stocks, forex or futures.
The Global VisionBy modernising, integrating and globalising the precious metal markets, ABX aims to redefine the way physical bullion is traded globally.
Our mission is to optimise global physical bullion market efficiency by connecting the world with an integrated physical bullion exchange. We aim to maximise inclusiveness and accessibility globally and provide relevant real-time price discovery.
Globalisation. Integration. Modernisation.
NEW YORK
ZURICH
ISTANBUL
SHANGHAI
DUBAIBANGKOK
SINGAPORE
HONG KONG
LONDON
AUCKLANDSYDNEY
GlobalTrading Hubs
Multiple independent local exchanges (trading hubs) have been amalgamated into one global marketplace. These trading hubs are independent trading, pricing, storage and delivery locations that allow participants to trade in the location of their choice, or take advantage of any pricing differentials that may exist.
A real-time locational price discovery mechanism that is the first of its kind.
The ABX exchange centres around the MetalDesk online trading platform, which allows Members and their end clients the ability to trade, store, and take delivery of physical precious metals.
The MetalDesk platform can be fully white-labelled and distributed downstream to Members’ end clients.
ABX has developed all technology and IP in-house and owns 100% of it.
OnlineTrading Platform
MetalDesk is a comprehensive online trading platform specifically designed to meet the requirements of the precious metals industry. It offers a comprehensive metals trading solution, enabling end to end management of the process from client account funding, order placement and trade execution, through to vault management and storage.
MetalDesk FeaturesReal-time pricing and market depth for 326 products in 11 countries globally
Central limit order book
Low latency order execution
Access to a global network of 11 trading hubs and delivery locations
23 hours a day trading, 5 days a week
Multiple language support
Vault contents management
Full branding of trading platform, marketing documents and support guides
Private client account management for brokers within MetalDesk
Finance management for trading with credit or cash deposits
Electronic Vault WarrantsAllowing the world to make use of their physical assets. ABX’s electronic Vault Warrant (eVW) technology is a first of
its kind solution developed 100% by ABX.
The eVW allows a broker to easily monetise the value of their clients’ bullion holdings by using the bullion as margin collateral.
Bullion Capital is now a Full Member of the ABX.
CREATEMembers and their clients can use the automated drop-down functionalities of MetalDesk to create an eVW for their gold orsilver bar.
PLEDGEOnce the eVW is created, clients can pledge the bar that is represented by the eVW to their Member.
COLLATERALISEThe bar can now be used as collateral; the value of the bullion can be used to trade the other asset classes that are offered bya Member.
RELEASEOnce the terms of warrant have been fulfilled and clients agree with their Members to remove the pledge, they can once again trade or take delivery of their bar.
Modernisation. Integration. Globalisation.
OurPillars
Modernisation
Our Pillars
Physical precious metals are one of the very few standardised asset markets that have not yet gone electronic in the institutional environment. With a primary objective of modernising the way this market works, ABX is bringing the institutional trade of physical precious metals into the electronic environment for the first time.
ABX introduces unprecedented efficiency, security, anonymity, confidence, cost-effectiveness and accessibility into the physical precious metals industry through the disruptive MetalDesk trading platform.
Streamlining Physical Trading Operations
The MetalDesk Platform:Dramatically boosts the bottom line for market participants(liquidity providers & brokers)
Decreases operating costs
Increases efficiency by eliminating the requirement to have phone broking or dealing desks
Increases members’ ability to expand revenues by offeringan expanded global target market
the ability to investors to trade from their white labelled platform23 hours a day
Globalisation
Our Pillars
A Universal Gold Price
Currently price differentials per location can become extreme due the barriers to entry and lack of price discovery mechanisms. Once our exchange hits a market infiltration tipping point, we envision that we will flatten the price of physical precious metals around the world, as market participants will be able to identify and act on price dislocations.
Interconnectivity
Barriers to Entry
Arbitrage
All 11 global trading hubs are interconnected and fungible with one another, allowing title to be electronically swapped from one location to the next, drastically reducing the need to transport bullion around the world and providing an efficient logistics solution.
ABX breaks down the barriers to entry to the major physical precious metals trading & liquidity centres around the world with a plug-and-play solution that incorporates real-time price discovery, clearing, storage and logistics in a transparent electronic environment.
Locational pricing differentials are easily identifiable and can be im-mediately acted upon to lock in arbitrage profits.
Our Pillars
The Game-Changing Mine-to-Market SolutionOur exchange integrates the physical bullion trade by offering unprecedented inclusiveness and connectivity to thewholesale market.
It is not by choice that the producers sell their supplies to intermediary dealers, it is because no such facility exists to operate in the wholesale market directly.
Our exchange platform can be used to connect the initial physical producer (Mining Producers) and the end consumers(Investors, Jewellers & Manufacturers), pulling the power away form the middlemen.
Any type of broker can offer and promote our platformto their client base.
Integration
The implications of offering a facility that faces the metal producers directly with consumers would be a game-changer in the precious metals industry.
ABX would be the sole provider of a “Mine-to-Market” solution for producers and end-users to make and take delivery directly from newly refined output or existing stock. The ability to price, deliver and participate on a real-time, centrally-cleared and anonymous basis will be extremely disruptive to the status quo.
This integrated solution is an extremely attractive proposition for both precious metal producers and end-users.
Since the concept of ABX was born in 2011, we’ve strategically planned out the development of thisindustry-pioneering exchange, placing particular emphasis on the critical testing phase to ensure that the platform is ready for global market introduction.
The wholly organic growth of the company is proof of the global need and market appetite for a solution that circumvents conventional mandates and restrictions and makes for a true global physical bullion marketplace that is scalable and efficient.
BuildingFundamental Traction
Bullion Capital has been used as the test
platform to launch ABX.
By organically building the systems,
mechanics, technology and user base under
the Bullion Capital brand, ABX is able to launch
successfully as an exchange and withstand all
degrees of scrutiny.
Full Timeline
Building Fundamental Traction
Conception
Bullion CapitalAustralian Launch
GlobalCommercialisation
ABXSilent Launch
MD2Global Launch
IntroducingBroker OfferingAustralian Launch
Aug 2013
Oct 2013
Jul 2014
Sep 2014 Feb 2016
Dec 2015
Jan 2011
ABXSoft Launch
Bullion Capital PhaseABX Phase
R&D Phase
Jul 2016
ABXGlobal launch
There has been a considerable increase in monthly broker registrations since our institutional soft launch in late 2014. We have had 80+ total registrations until today.
Building Fundamental Traction
Broker Registrations
2013 2014 2015
9
8
7
6
5
4
3
2
1
0Jun Jul Sep Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Go Markets White-Label:http://www.gomarketsaus.com/why-go-markets/range-markets/physical-bullion/
Bullion Baron Review:http://www.bullionbaron.com/2015/05/review-of-bullion-capitals-metaldesk-2.html
“I’ve been impressed with almost everything I’ve seen from the platform and those running it, from the ease and speed of signup, the slick appearance of the trading platform and the quick response from the team at Bullion Capital with any questions I’ve had. The platform brings together unique features and functionality for trading allocated bullion that I haven’t seen anywhere else.” May 03, 2015
Finemetal Asia (Liquidity Provider):http://www.nasdaq.com
“We look forward to further expansion through this new innovative marketplace, which we anticipate to be a new era for the precious metals industry; one that is more accessible and based on a system that caters to the demands of the Asian market. The time is right for Bullion Capital’s innovative approach.”
Press &The Product
The scalability of the ABX platform makes its application ideal across a diverse range of markets and presents a correspondingly diverse range of value propositions.
This scalability and versatility coupled with its unique price discovery mechanism ensure that the product will not only effectively match the needs of all our target markets but will also cater to the regional needs of physical bullion traders around the world.
ABXMarket Opportunity
Key Target Market SectorsABX Market Opportunity
Institutional Investors
Asset Managers • Fund complexes • Sovereign Wealth • Hedge Funds • Insurance Companies • QDII Funds
Fiduciaries • Private Banks • Multi-Family Offices • Outsource CIOs
Asset Owners • Foundations • Endowments • Public Funds • Corporates • UHNW/Single Family Offices
Physical Participants
Traders • Bullion Dealers • Wholesale Traders
Producers • Miners • Refiners
End-Users • Jewelers • Industrial Manufacturers
Other • Central Banks • Exchanges
Administrators & Brokers
Investment Administrators • RIA & Broker Dealer Custodians • SMSF Admins (AU) • SDRIA Admins (USA) • SIPP Admins (UK) Brokerage Platforms • FX Brokers • Commodity Brokers • CFD Brokers • Electronic market operators and BD • Physical metal marketplaces
China is the world’s largest physical bullion investment market. Since bullion investment was permitted in 2004 demand for bars and coins has surged from a mere 10 tonnes to 397 tonnes in 2013 (World Gold Council).The traditional appeal of gold to the Chinese people, coupled with rising real incomes will create even more potential consumers with greater spending power. Between now and 2020 Ernst & Young estimate that the number of middle class households will rise from 300 to 500 million.
ABX Market Opportunity
Physical Bullion Investment Market - ChinaChinese Investment* demand and the gold price
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
RMB/gramme350
300
250
200
150
100
50
0
450
400
350
300
250
200
150
100
50
0
Investment* (t) Chinese gold price (RMB/gramme, rhs)
Investment includes total bar and coin demand.Source: Shanghai Gold Exchange, Thomson Reuters GFMS, World Gold Council
Tonnes
Gold investment in Europe has undergone a structural shift since the Global Financial Crisis. Historically demand was almost non-existent, averaging a paltry 2.6 tonnes per quarter in the 5 years leading up to the crisis. Now Europe accounts for between 200-300 tonnes of demand annually (World Gold Council).A 2010 study by the Steinbeis Research Centre for Financial Services found that 26% of German citizens own physical gold bars or coins as an investment.Data Source: World Gold Council
Physical Bullion Investment Market - EuropeEuropean bar and coin demand, rolling 4-quarter total
Germany Switzerland Other Europe France
Tonnes450
400
350
300
250
200
150
100
50
0
-50Q1’04 Q1’06 Q1’08 Q1’10 Q1’12 Q1’14
ABX Market Opportunity
The Middle East has a strong cultural affinity for gold and, along with India, China and other Asian markets, is a key gold investment market.
Demand for gold bars and coins by Middle Eastern investors totalled 41.7t (US$1,698 million) in 2014. While this represented a 23% decline on the year, the long-run uptrend from the 2005 low is still firmly in place and demand was 20% above the five-year average.Data Source: World Gold Council
Physical Bullion Investment Market - Middle EastMiddle East Total Consumer Demand (value, US$mn)
ABX Market Opportunity
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
$1,698
$2,423
$1,792 $1,698
2014 2013 2012 2011
TotalSaudi ArabiaEgyptUAEOther Gulf
Industry ProblemsABX Solutions
Precious Metals Industry Asset Management Industry Online Broking Industry
Industry ProblemsMore pronounced in regions that have an affinity towards precious metals.
The siloed wholesale spot trading & clearing infrastructure based in London does not cater for the interconnected global market which the industry operates in.
The physical precious metal markets across the world are archaic, inefficient and in need of significant reform to become modernised, globalised and integrated.
There is a recognised need in the marketplace for a centrally cleared wholesale bullion exchange.
Asset Managers do not have an efficient, liquid and cost effective investment solution available to them to offer direct investment and portfolio diversification into physical precious metals to their clients.
There is no such facility where physical precious metals can be utilised as good collateral in the asset management industry.
There is no real-time tradable platform available to online brokers to offer physical precious metal trade to their client bases.
There is no such facility where physical precious metals can be utilised as good collateral in the online broking industry.
Industry Problems – ABX Solutions
Overview
Industry Problems – ABX Solutions
The Precious Metals Industry
The Problem With The London Market
OTC Market
London Price
Unallocated metal - Custodian holds title = counterparty risk
Inefficient & expensive logistically
Clearing and benchmark pricing during London time for London PMs
Only wholesale lot sizes - Market not available to private investors
Siloed London Market
Non-Transparent - Open to undisclosed re-hypothecation andcontinuous allegations of manipulation
Is incurring an ever growing distrust and dislikefrom global market participants
The ABX Solution
Centrally Cleared through a CCP
True global price + True local prices
Allocated - Investor holds title = mitigates counterparty risk
Trading hub localities worldwide - Can store gold locally in home region.Fungible vault mechanism - loco title swap - arbitrage opportunities
Trading around the clock
White-label platform solutions enable the clientsof Members to trade small lot sizes directly on the exchange
Global amalgamated market connecting local physical markets
ABX has received overwhelmingly positive feedback and adoption –its launch is already strongly anticipated by some of the industry’s
most respected professionals
Transparent and centrally administered
The ABX Modernised Solution
The ABX trading platform, MetalDesk, offers a centrally cleared exchange that is efficient, transparent and cost-effective; it provides direct access to the real-time wholesale market.
ABX enables the phone broking/dealing desks in these operations to be eliminated or at least minimised.
End clients of dealers can place trades directly into the market themselves with MetalDesk’s downstream client functionality.
MetalDesk can be interfaced with hedging platforms to streamline the full trade process without human intervention.
Participants can offer trade 23 hours per day and attract not just local clients, but clients anywhere in the world who wish to trade in any of the 11 local exchanges offered in the platform, leading to additional volume at no extra cost.
This added efficiency will boost market participants’ bottom line net income by: Decreasing operating costs Increasing the volume of business
Wholesale market participants currently trade OTC outside of the electronic environment either via phone, email, or in person. These systems are completely manual, problematic, inefficient and costly. Phone dealing desks are costly and involve manually booking a trade, placing a physical order with a supplier and hedging the trade.
There is an acceptance in the market that the legacy OTC London market architecture is outdated and there is a need for a transition to a centrally cleared exchange.
“…you can’t (operate) in an OTC environment as we used to for much longer. The regulatory demands will force you to be on a cleared platform – information on volumes, trade reporting, flows all has to be out there.” Senior Precious Metal Trader – CME Reuters Article
The Precious Metals IndustryAn Archaic & Inefficient Market
Industry Problems ABX Solutions
The ABX Globalised Solution
Precious Metals IndustryThere Is No Global Physical Bullion Market
ABX interfaces these markets and aggregates global physical liquidity.
ABX allows local market participants to expand their horizons internationally. This enables them to benefit from international liquidity and attract international clients.
ABX breaks down the barriers to entry to each physical market.
ABX directly interfaces these trading centres allowing traders to arbitrage the differential. Accordingly, we contend we will flatten the price of physical gold and silver.
Industry Problems
Siloed and Disconnected
Limited Resources
Barriers to Entry
Local physical markets currently trade in a very siloed manner, completely independent and disconnected from one another.
Many organisations do not have the resources to conduct the necessary due-diligence, understand the regulatory framework and establish global operations.
There are significant barriers of entry into the physical market in each location. Outside of the big bullion banks or international trading houses, local market participants are only trading in their home region and only facing local clients. As a result there has been no pre-existing global aggregator platform and substantial price differentials exist in the different liquidity centres around the world.
ABX Solutions
The ABX Integrated Solution
Precious Metals IndustryPrecious Metal Producers Do Not Have Access To The Wholesale Market
ABX provides this facility to enable suppliers to act as Liquidity Providers and access our exchange directly and sell metal at the “Offer” price. Currently, mining producers must sell to an intermediary and hit their “Bid”, which decreases their revenues materially. As the vast majority of producers sell at spot this is a compelling proposition for them.
ABX integrates the physical trade cycle, allowing for end consumers to access the exchange directly.
By changing the physical price maker and taker dynamics we contend that we will change the price discovery dynamics of theprecious metals market.
We also contend that by bringing the Producers directly onto our platform we will force the rest of the industry into our market.
Industry Problems ABX Solutions
Unlike in the energy or base commodity space, precious metal mining producers (suppliers) had no pre-existing way to enter the wholesale market directly.
Prior to ABX there were challenging barriers to entry for end consumers (Jewellers, Manufactures & Investors) to directly access the wholesale market. The physical trade flow of bullion typically passes through a series of intermediaries.
Electronic Trading Takes Over Currency Market Roiled by Scandals
“Electronic trading accounts for more than half of the $5.3 trillion-a-day foreign-
exchange market for the first time, as clients seek more transparency after rate-fixing
scandals.
Electronic trading is good for trading, good for transparency and good for regulatory
compliance. We’re going to see a gradual takeover of electronification.”
http://www.bloomberg.com/news/articles/2015-05-26/electronic-trading-takes-over-currency-market-roiled-by-scandals
The Precious Metals IndustryGrowing Distrust
CME developing European gold futures contract: sources
World Gold Council considers launch of new London exchange
“But you can’t (operate) in an OTC environment as we used to for much longer. The regulatory demands will force you to be on a cleared platform – information on volumes, trade reporting, flows all has to be out there.”
http://uk.reuters.com/article/2015/05/21/uk-gold-futures-cme-idUKKBN0O619B20150521
“That could see a move from London’s bilateral over-the-counter gold market, which has been criticised for its lack of transparency, to a centrally cleared market. The WGC has hired a number of consultants and spent the past six months pitching a business case for banks to consider the alternative trading infrastructure, the people said.”
www.ft.com/intl/cms/s/0/a4a28c1a-d858-11e4-8a68-00144feab7de.html#axzz3cANeEXjP
Settlement Methods in Global Commodity Futures Markets
29%
71%
33%
92%
8%
Total 50Total 109Total 914
67%
All contracts Top 50 traded contractsActively traded contracts
Industry Problems – ABX Solutions
Physically SettledCash Settled Source: LME Week Asia 2015
Asset Management and Online Broking Industry
The Problem: Lack of an efficient physical precious metalinvestment offering
The Solution: The Solution:
ABX provides a real-time online trading platform that can be white-labelled and utilised by wealth managers and online brokerage firms around the world.
Asset Managers and brokers can either act on behalf of their clients and/or disseminate the platform to their clients so they are able to trade on their own account 23 hours per day anywhere in the world.
The MetalDesk platform is a holistic plug & play solution appropriate for the financial services industry.
The ABX electronic Vault Warrant (eVW) system provides for the first time the ability for physical precious metals to be utilised by investors and Prime Brokers.
eVWs are easily created and pledged within the MetalDesk platform to be utilised as margin collateral or for financing purposes.
This allows online brokers and asset managers to utilise the wealth held by their clients in physical bullion as margin collateral for their other trading services.
The Problem: Unable to use physical bullion as good collateral,despite it being a tier 1 asset
Industry Problems – ABX Solutions
Top LevelManagement Team
Top Level Management TeamABX has secured a diverse and comprehensive skill set in its Board of Directors and Key Management personnel. Bridging multiple industries, jurisdictions and personal back-
grounds, ABX’s key executives bring a tremendous amount of knowledge and experience to the direction of the company and are committed to ensuring it achieves its goals.
T h o m a s C o u g h l i n M i c h a e l C o u g h l i n D a v i d C h a r l e s
CEOChief Executive Officer (Executive Director)
CFOChief Financial Officer (Executive Director) Non - Executive Director
Thomas has worked in the investment, funds management and bullion industries for approximately fifteen years.
His professional portfolio management career spans the foundation of the boutique investment company, TRAC Financial, to the establishment of a highly successful Absolute Return Fund.
Thomas has worked collaboratively in building the complex systems of a cross-border international bullion market with an extensive global network of central bankers, bankers, brokers,
fund managers and advisers. His experience, extensive network and broad knowledge of capital
markets, enable him to deliver exceptional value and insightto all stakeholders.
Michael Coughlin, Chief Financial Officer and co-founder of ABX, has a total of 42 years’ experience as a CPA in the accountancy and financial services professions. He has owned and operated Brisbane-based public accountancy firm and financial services
company Coughlins Accounting and Business Consultants since 1984. Michael is an Australian Registered Tax Agent, Registered
Company Auditor and Registered Superannuation Auditor.
Michael’s tertiary accountancy education was completed at the University of Southern Queensland, with Post Graduate studies
at the University of Queensland in Economics, and Canberra University in Taxation Law.
David Charles, Director of ABX, has acted for some of the world’s largest and most prominent entities across four continents.
Experienced in both front-end and contentious modes, David’s experience spans across corporate structuring, domestic and
cross-border mergers & acquisitions, equity markets, finance & project finance (including construction), insurance & reinsurance, intellectual property, planning & environment and risk syndication.
Being a commercially-minded lawyer, David possesses a deep understanding of the objectives of and the risk environment in
which ABX operates.
David holds a Bachelor of Laws (Commercial Law) from the University of Queensland and a Graduate Diploma of Legal Practice. He is admitted/registered in several jurisdictions
worldwide.
R o s a l y n C h a r l t o n
A n t o n i a D r o u s s i o t o u E r i c M a i n e
CTOChief Technology Officer
CMOChief Marketing Officer
Top Level Management Team
Senior Managing DirectorHead of Corporate Strategy and Product Development
J u s t i n V a n T i l
Chief Operating Officer
Justin Van Til is the Chief Operating Officer (COO) of Allocated Bullion Exchange (ABX). Throughout his career, he has created and managed business development and product innovation initiatives as an executive for a number of financial
technology firms in the institutional asset management, investment consulting, and private wealth advisory markets.
Justin was the founder of Gold Frontiers, an enterprise software and services company focused on the institutional market for storing physical precious metals. Justin managed global sales at Smartleaf, a leading overlay technology
provider to private banks and asset managers. Under his leadership assets grew from 3B to 35B traded on the platform. Justin led strategic marketing at New Frontier Advisors (NFA), a portfolio optimization software firm and asset manager.
His clients at NFA consisted of the World Gold Council and other institutions that oversaw greater than 1 trillion.
Antonia Droussiotou heads up the marketing and advertising divisions at ABX. Antonia has joined ABX at a turning point in the company’s establishment to develop, strengthen and over time solidify the brand in all its focus markets.
Her career spans 10 years of experience in the advertising and marketing fields. She has spent the past 2 years heading the global marketing activities of a start-up international forex broker, managing both online and offline marketing
activities and initiatives. Her aptitude in brand building, the creation of integrated marketing solutions and the supervision of the full spectrum of marketing specialties make her a valuable addition to the ABX team.
Eric Maine has more than 30 years of senior management experience in the exchange and financial markets. His most recent positions in the Asia Pacific Region included Director of Market Development at the Hong Kong Mercantile Exchange (HKMEx), Head of Product Development and Management at Singapore Exchange (SGX),
and Head of Product & Research at Singapore Mercantile Exchange (SMX). Eric has also held positions at Intercontinental Exchange (ICE) and the New York Board of Trade.
Outside of the exchange space, Eric has held senior level management positions, including Senior Managing Director of Canning/Maine Inc, a New York based investment firm, Managing Director/Head of Metals at Allied
Irish Banks and Vice President of Metals and Mining at Prudential-Bache (now Jefferies Bache).
Rosalyn Charlton heads up the technical teams at ABX. Rosalyn has over 15 years’ experience in Software Engineering management, with a focus on IT process design and technical team strategies. She holds a degree in
Electronic Engineering and a specialist knowledge of Agile software development methodologies.
Rosalyn has spent a number of years in senior management positions; and later in consulting roles targeting strategic IT and Agile implementations at various scales; always with a view to the effective use of technology
solutions to meet business objectives. Her experience spans three continents and a number of industries including financial, telecommunications, superannuation
and retail.
Top Level Management Team
R y a n C a s e D a n R y a nP e t e r M a g a n
Head of Institutional Sales Operations Manager
Ryan Case heads up the global sales team at ABX. Ryan has worked in the accounting and finance fields and brings market experience from his macro trading background; actively trading
several asset classes with a specialisation in the commodity space. Ryan holds a Bachelor of Business (Finance Major) and
Bachelor of Laws.
Having been part of the development of Bullion Capital since its inception in 2011, Ryan has worked extensively with finance and bullion industry participants across every major financial hub and
is a valuable asset to ABX.
Peter is a highly experienced financial services professional with extensive knowledge of trading, operations and systems
for multiple financial instruments and products in the European, North American and Asian markets.
With over 25 years of wide ranging business experience, Peter held a variety of Back and Middle Office positions with top tier financial institutions in London before moving to Singapore to
head up the establishment of regional Asia Pacific Futures Middle Offices, firstly for MF Global and then ICAP.
Dan Ryan is a commercial and technology lawyer with over 15 years’ high-level advisory and transactional experience in Asia. Mr Ryan began his career working for leading international law firms
(Baker & McKenzie, Freshfields) in their corporate, intellectual property and technology groups before moving to senior in-house
roles.
He has served as a director on a range of boards – from publicly-listed multinationals, to fast-moving technology start-ups. In
addition to his legal background, he reads and speaks Mandarin to a very high professional level, and has particular expertise in the
China market.
General Counsel
ABX has received overwhelmingly positive feedback and secured the interests of some of the most influential financial, precious metals market and technology specialists in the world. To utilise and leverage their experience and expertise, ABX has established an Advisory Committee to provide strategic advice in consultation with Senior Management pertaining to the development, implementation and evolution of ABX and its respective business units.
AdvisoryCommittee
Advisory Committee
Professional ExperienceNAME
Christopher OlsonChristopher Olson is currently CEO of Treasure Island Coins, Inc., a US-based wholesale bullion market maker and white label fulfillment services provider. Chris maintains an intimate working knowledge of the US bullion market, dealing regularly with all major US market makers, dealers and distributors, as well as facilitatingexchange on the secondary bullion market.
Dale Zhu
Dale Zhu has 20 years’ experience in precious metal trading, serving corporate clients and financialinstitutions, and the central bank. For 10 years he headed the Bank of China New York branch trading desk.Dale moved to BOCI in Hong Kong in May, 2011, and co-founded the global commodities business.He is now Deputy CEO for Tai Fung Finance.
Ned Naylor-Leyland
Ned Naylor-Leyland graduated in 1998 with a BA (Hons) degree from the University of Bristol. In 2001 he began his career at Neilson Management, after which he moved to Smith & Williamson, formerly NCLInvestments, where he was an Investment Manager. Ned joined Cheviot in July 2008, as an advisor to aspecialist precious metals fund.
Andrew MaguireAndrew Maguire is an Independent London Metals Trader and Professional Analyst, internationally renowned for his unique ability to read the precious metals market from his 35 years trading experience in financial andcommodity markets. In 2009, Andrew provided evidence to the United States regulator, the Commodity Futures Trading Commission, relating to fraud and price manipulation in the international gold and silver markets.
Advisory Committee
Professional ExperienceNAME
Pádraig Johannes Seif
Bruce Bockmann
Pádraig Johannes Seif is the CEO of Finemetal Asia Ltd., a specialist precious metals distributor forArgor-Heraeus in Asia, operating mainly in Hong Kong as a wholesaler of physical gold products. Pádraig holds an LLB in English Law from the University of London and a degree in German and English Law from the University of Passau. His career spans over 10 years of experience in the legal and financial sectors. He has worked on structured finance and capital markets transactions relating to a broad range of structured financial products, mainly on behalf of corporate trustee divisions of international banks.
Bruce Bockmann is an experienced investment banker and innovation specialist. Amongst other entrepreneurial pursuits, Bruce spent the majority of his professional career as a Managing Director of Morgan Stanley and was responsible for the startup and development of five separate global business groups within the firm over his 25 year career. Bruce was a member of the Finance Group of the National Innovation Initiative, a think tank thatgenerated innovation stimulating policy initiatives for the government, university and financial sectors.
Marcus Grubb
Marcus Grubb was the Managing Director of Investment & Strategy at the World Gold Council (WGC) and a member of the senior management team. The WGC is the marketing and market development association for the gold industry. Prior to working at WCG, he held senior Board level and management roles in financial exchanges and investment banks over the last twenty years and has a prize winning first from Oxford University.
ABX’s MetalDesk will offer two core solutions:Wholesale Physical Trading and Investment
The Wholesale Physical Trading solution offers functions and mechanics that provide value to the physical precious metals industry.
The Investment solution offers a ground breaking investment platform to the asset management industry, allowing brokers to disseminate the MetalDesk platform downstream to their clients at the private investor level.
Execution Fees - charged at the time of trade.
Storage Fees - apply to any bullion that is stored within the ABX vaulting network.
eVW Fees - applicable to clients that utilise ABX’s eVW facility. The four key fees are Create, Pledge, Release and Collateralisation Origination.
3 Key Revenue Streams
RevenueModel
ABX Financial Projections - Base Case
Year 1 2 3 4 5
PHYSICAL TRADE
Execution 1,236,382 3,518,632 5,800,988 8,083,344 10,365,700
Storage 152,460 930,144 2,425,350 4,639,584 7,571,947
Total 1,388,842 4,448,777 8,226,338 12,722,928 17,937,647
Execution 620,008 2,038,036 2,557,714 3,008,793 3,390,383
Storage 379,105 1,652,391 3,324,934 6,252,994 10,499,696
Total 999,113 3,690,427 5,5882,648 9,261,787 13,890,079
Create/Pledge/Release 429,625 2,072,920 4,075,255 5,922,030 7,766,495
Collaterization 741,901 1,568,146 4,611,513 7,175,630 9,732,689
Total 1,171,526 3,641,066 8,686,768 13,097,660 17,499,184
Total 339,162 1,643,632 3,861,231 6,365,814 8,870,396
Total 2,555,913 6,643,627 9,366,827 12,090,027 14,813,227
Total - - 786,897 1,907,322 3,027,748
Data Distribution
Total - 50,000 600,000 1,200,000 2,400,000
Total Yearly Revenue 6,454,557 20,117,528 37,410,709 56,645,537 78,438,281
Expenses 6,874,924 6,874,924 7,664,684 9,626,755 12,176,022
Profit (yearly) -420,367 13,242,604 29,746,025 47,018,783 66,262,259
Electronic Vault Warrants (eVW)
INVESTMENT
Refining Contracts
Asset Management
Derivative Exchange Tie-Ups
Revenue Model
Conservative Assumptions Attractive Profits
Profits – Base Case
0 1 2 3 4 5
Infiltration Rates - Base Case
0%
2%
4%
6%
8%
10%
Physical Trade Refiner Contracts Asset Management Derivative Exchange Tie-up
ABX Revenue Streams - Base Case
Physical Trade - Trade Execution and Storage Fees Electronic Vault Warrants eVWs - eVW Create/Pledge/Release Fees; Collateralisation Fees
Investment - Trade Execution and Storage Fees Refining Contracts - Trade Execution Fees
The ABX business model changes the way physical bullion is traded, priced, stored and financed on a global scale. The revenue model projects a modest infiltration rate (1/2 of 1% at year 5) based on annual global bullion (ex-ETF/asset management) spot physical/paper turnover ($14 trillion).
eVWs will have great appeal across several of the ABX revenue segment universe allowing participants to fully segregate already allocated bullion holdings, and utilise bullion as collateral for financial products both within the ABX offering and externally. Bullion, for the first time on a global, secure and accessible basis, becomes an income generating asset class. The revenue model reflects a modest infiltration of globally stored and traded bullion.
Represents the millions of clients trading daily on online brokerage platforms in FX, commodities, CFDs, as well as later year participation by hedge funds and large institutional proprietary/HFT traders. The growth model is based on current ABX growth and penetration within the online broker community.
Expands the reach along the supply chain whereby, for the first time, producers (annual market value $80+ billion) and end-users are able to participate directly in the sale/purchase of bullion against refiner output.
Revenue Model
Asset Management - Trade Execution and Storage Fees Data Distribution - Subscription Fees
Derivative Exchange Tie-ups - % Derivative Exchange Fees; Fixed retainer
Represents a modest infiltration into the existing and projected growth of bullion holdings in alternative asset portfolios including the current $40+ billion AUM of bullion ETFs (ABX trade execution plus storage is on average 1/3 the cost of an equivalent GLD ETF investment; ABX liquidity already exceeds GLD ETF thereby reducing entry/exit price slippage).
Similar to most exchanges (spot, equity, derivative), historical prices and associated analytic tools are valuable assets and an ever-growing revenue segment. ABX will be no exception, and we expect modest data distribution revenues, in post Yr1 projections, to institutional traders, producers, end-users, banks, multilateral financial institutions and non-profit bullion industry bodies, among others.
ABX physical market price discovery will result in one or more derivative exchanges (global and regional) to utilise ABX spot physical prices as basis for successful bullion futures and option contracts. Revenue model is a modest infiltration rate, starting in Yr3, of COMEX volumes (could be multiple exchange tie-up contributing to revenue base).
Revenue Model
ABX Revenue Streams - Base Case
ABX Financial Projections – Global Strategic Partner(s) Case
Year 1 2 3 4 5
PHYSICAL TRADE
Execution 1,236,382 19,000,614 31,325,336 43,650,059 55,974,781
Storage 152,460 3,306,389 11,385,349 23,342,210 39,176,971
Total 1,388,842 22,307,003 42,710,685 66,992,268 95,151,752
Execution 7,651,268
Storage 13,153,660
Total 20,804,928
Create/Pledge/Release 429,625 4,368,730 9,502,135 14,044,040 18,540,905
Collaterization 741,901 2,421,498 10,693,568 16,958,953 23,230,719
Total 1,171,526 6,790,228 20,195,703 31,002,993 41,771,624
Total 339,162 2,321,957 5,113,522 8,296,429 11,374,978
Total 2,555,913 9,284,640 10,728,427 13,451,627 16,174,827
Total - - 1,393,794 3,331,196 5,011,834
Data Distribution
Total - 50,000 600,000 1,200,000 2,400,000
Total Yearly Revenue 6,454,557 44,988,344 89,108,702 138,551,250 192,689,944
Expenses 4,596,737 6,911,464 10,147,997 14,862,420 21,019,332
Profit (yearly) 1,857,820 38,076,880 78,960,706 123,688,830 171,670,612
Electronic Vault Warrants (eVW)
INVESTMENT
Refining Contracts
Asset Management
Derivative Exchange Tie-Ups
620,008 2,465,834 4,383,160 6,443,200
379,105 1,768,682 3,983,411 7,833,537
999,113 4,234,516 8,366,571 14,276,737
ABX offers an interconnected global exchange with relevant and efficient price discovery in local liquidity centres around the world.
This global exchange flattens the physical price of gold and produces a relevant global benchmark price.
A derivatives exchange could list and price futures & options on the ABX global benchmark price.
Exchange Futures for Physical (EFP) mechanisms can be created to link futures contracts to theABX spot physical markets.
Proposed Partner Exchange Structure
The exchange provides physical market participantswith what they are looking for around the world:
Local market price discovery (23 hours per day)
Local market liquidity, interfaced to global market liquidity
Local market delivery efficiency
Participation anonymity
Access to global liquidity centres with high barriers to entry
Integration – Connect precious metal producers with end investors & consumers.
Utilisation of bullion as good collateral through ABX eVWs.
A New Global Precious Metals Exchange ArchitectureA Global Loco Trading Hub Market with a Unified Vaulting Network forAllocated Bullion Interfaced to Derivatives Contracts & an EFP System
One True Global Price
Collateral Utilisation ABX eVWs
Delivery Mechanisms for other exchanges
Market Participants
Perfect arbitrage between localities will flatten the global price.This can become a reference price that derivatives can be priced on.EFPs can be linked between the global futures contracts and thelocal spot markets.
Worldwide | America | Europe | Asia | Africa | Middle East
Worldwide | Futures Options | Forwards Swaps
Worldwide - All time zones | America | Europe | Asia Africa | Middle East
GlobalMarket
Reference Price
Shanghai FTZ
Sydney
Auckland
Hong Kong
Dubai
Singapore
Istanbul
New York
Bangkok
Zurich
London
Global DerivatesContracts
EFPs
Direct Wholesale Market Access Sell investment grade bullion upon refiner output.
Sell from ABX approved Global Vault locations.
Anonymous Trading No one knows your position. No one can front-run your orders.
Market Maker not Market Taker Sit on offer side of the market.
No longer have to take dealers bid.
Transparent Pricing Strips away all dealer/intermediary imbedded fees, profit margin add-ons and discounted premiums.Attractive Funds Settlement 100% settlement of funds deposited in account on t+0 to t+2 depending upon contract traded.Full Logistics Support From ABX or ABX logistics providers, if desired.
Global Trading 23/5 in 11 global trading/pricing/delivery hubs.
Producer Partner SynergiesBenefits to all Producers ABX Participating Gold Producer
Potential Benefits Value
Spot Pricing $5.25
Allocated v. Unallocated $0.50
Avg. 1kg bar Premium $4.00
Logistics
Time Value
ABX/Global Clearing- forward sales/gold loans
eVW long position collateral
$0.50
$1.78
$2.50
$2.29
Paradigm price shift ????
Derivative Efficiencies $3.50
Total per ounce $20.32
Important Information and Disclaimer
Important Information and Disclaimer
General
Confidentiality Undertakings
This investor presentation (the “Presentation”) has been prepared by Australian Bullion Exchange Limited (trading as Allocated Bullion Exchange) (“ABX”). While this Presentation has been prepared in good faith and to the best of their ability by the ABX management, recipients should make their own independent investigations and enquiries regarding matters in this Presentation, and rely upon their own judgment as to the accuracy and completeness of any information. Any reliance placed by the recipient on any information shall be at their own risk and ABX and other related entities shall not be liable for any indirect or consequential loss whatsoever or howsoever arising.
The information contained in this Presentation is being provided on a confidential basis to the recipient solely for the purpose of evaluating an investment in ABX. This Presentation may not be distributed, reproduced or used without the prior, written consent of ABX for any purpose other than the evaluation of ABX’s business. By accepting a copy of this Presentation (whether in hard or soft copy form), the recipient agrees, for itself and its related bodies corporate and each of their officers, employees, agents, advisors and other stakeholders, to maintain the confidentiality of this information. The recipient acknowledges and agrees that any reproduction or distribution of this Presentation, in whole or in part, or any disclosure of its contents, or use of any information contained in this Presentation for any purpose other than to evaluate an investment in ABX is prohibited. Where this Presentation has been provided to you under a non-disclosure and/or confidentiality agreement, the terms of said document(s) shall override any confidentiality terms contained herein.
Contemplated Transaction
Forward-looking Statements
ABX reserves all rights in relation to the conduct of any transaction, including but not limited to the right to deal with parties on materially different terms, terminate discussions with any or all persons, alter or discontinue any offer to purchase shares in ABX at any time prior to entering into binding legal arrangements, all without prior notice or liability to any recipient of this Presentation or any other person. This Presentation does not purport to provide all of the information the recipient may require in order to evaluate an investment in ABX. Recipients should make any of their own enquiries and evaluations which they consider appropriate to verify the information provided herein.
This Presentation may contain forward looking statements relating to ABX’s operations that are based on management’s current expectations, estimates, projections and assumptions about the business. These statements are not guarantees of future performance, results, achievements or other events and are subject to certain risks, uncertainties and other factors, some of which are beyond the control of ABX or their representatives and are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecast or projected in such forward-looking statements. No representations, warranties or undertakings are made as to the accuracy or reasonableness of such expectations, estimates, projections and assumptions.
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